HBL Claims Misconstrued Identities of Pakistanis Resulted in Penalty by US Regulators

Relating the United States and Habib Bank Limited (HBL) case about the imposition of $225 million penalty on HBL another twist was added when a senior official of the bank made a statement on Wednesday saying that the US officials misinterpreted identities of two Pakistani individuals with the prohibited people of Iraq and Iran.

As claimed by the US officials the transactions made were under the name of Saddam Hussain, ex-prime minister- Iraq, Tariq Aziz and Al-Ameen, an Iranian oil tanker firm. Whereas these transactions were made by Pakistani individuals, Nausheen Ahmad, HBL legal department’s head said this while speaking before the Senate Standing Committee on Finance.
The committee called both HBL and SBP (Standard Bank of Pakistan) employees to get an update about the US’s $225 million penalty, imposing verdict on HBL’s New York branch.

Both the former Iraq’s prime minister name and the name of an Iranian oil tanker firm are on the SDN List (Specially Designated Nationals and Blocked Persons List). The transactions made under these names were called suspicious by the United States officials.

Ms. Ahmad defended her case by saying that Al-Ameen is a Gujranwala based Pakistani merchandiser and Tariq Aziz is a common name in Pakistan. She said that in their opinion these transactions can in no way be classified as “Prohibited”.

Justifying HBL’s decision of lying low and not challenging the penalty claim, Nausheen said that this option was given consideration but later the bank decided not to involve itself in any further risk.

Also Read: HEC Warns Against Illegal Educational Institutions

The New York Department of Financial Services from August 2017 started the procedure of charging civil financial penalties equal to $629.63 million. HBL has already paid the $225 million penalty in an out-court settlement.

The United States establishments’ verdict has raised many questions behind their reasons, this led to the shutting down of HBL’s New York branch.

Irfan Ali, Executive Director Banking-SBP called the US’s decision a “principled decision rather than a transaction-based decision”.

HBL’s legal head said that many transactions amounting to $150 billion were made but the US officials only focused on five transactions which as per them were not informed. The legal head said that some transactions were of an account related to Axact which was later adjourned by the bank.

From the investigation report of New York’s Department, it was noted that some transactions went un-reviewed because the executing parties were on the good guy list. The report signifies that the names of Saddam Hussain and Iran’s oil tanker firm were on that list too.

From the report findings, it was further claimed by the US officials that there were 200 other suspicious transactions that were neither noticed or mentioned by the HBL branch.

The suspicious activities involved a broad spectrum of attributes from economic purpose lacking dealings, to examples of constructing, shell firm commotion and politically revealed person bustle.

When asked by Mohsin Aziz (Senator of PTI) whether HBL conveyed all suspicious transactions. Rizwan Haider, HBL’s Chief Risk Officer said that the US controllers asked for some other transactions as well.

In NEW York, HBL has been running its wholesale banking branch since 1978. The major service offered by the bank was of US dollar clearing to a set of chosen clients.
US officials order has a factual error as it claims that HBL is majorly owned by the Pakistani government. Whereas, the government sold its major stakes in 2004 and later in 2014 the remaining stakes were also divested.

HBL’s Chief Risk Officer said that HBL tried everything possible to attain betterment in the already prevalent systems but the US regulators do not acknowledge the bank’s efforts.

HBL was downgraded by the US officials in December 2015 and “a cease and desist” order was issued.
This decision was an unexpected one for the HBL officials. According to Rizwan Haider, negotiations between the bank and US regulators were going on relating to betterment in bank systems.

He further mentioned that HBL took a decision of getting in line with the Saudi Arabia’s Al Rajhi Bank to make sure that the easy flow of foreign payments is maintained. US authorities marked AlRajhi as a high-risk client, Irfan Ali told. HBL’s New York branch did $65 billion business with Al Rajhi bank out of its $287 billion business.

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